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tv   Wall Street Week  FOX Business  June 11, 2016 9:00am-9:31am EDT

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instagram @kennedynation. email for next week. you have a beautiful weekend. it starts now. good night. and good night from new york. >> announcer: this show has never been solely about investments. we talked about anything that affected people and their money. from new york city the new "wall street week." anthony: welcome to "wall street week." i'm anthony scaramucci. gary: i'm gary kaminsky. it's been one week since wall street and main street was hit
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with a disastrous jobs report. not you question is was this an outlier or are we headed to a recession. gary: our special guest is a disciple of jack welch. later becoming the c terks o of home depot. most objective observers would say he saved the company. he's the founder of accelerate investment company. welcome to the show. what do you think the most significant obstacles are for growth in our economy and corporate america. >> one of the biggest things has been policy coming out of this administration has stiestled all levels of business. that's number one. number two, the gdp. you talked by the in some of
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your 067ing comments. -- son of your opening comments. every quarter they put out an aspirational number. it's hard to create jobs when you don't have gdp. that's why we saw the 38,000 number. anthony: what kind of policies do you think are hampering the growth? >> what we see coming out of this administration. let's look at the impact on small businesses from dodd-frank. i have seen some of the medical companies that have come out with these new taxations have flipped the company overnight going from profitable to uninformatio -- tounprofitable s on these medical devices. i deal with that personally in my company and i deal with it in
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my portfolio companies. gary: i have had viewers come up to me the past several months. they hear on the news there is so much money overseas. if it came back here it would benefit hiring and business. you have been in the seat. you had to make decisions. what could happen in washington to bring that money back to this country to help grow this economy? what is the blueprint? >> i wrote an article about this on my monthly postings. i think it's very straightforward. you have to take it away from government control. i suggested putting a blue ribbon team in place. prior ceos like my mentor jack welch, those of us who would volunteer to create this blue ribbon team. we would look at the funds that are offshore. i think we could repatriate those at a lower rate. what would we do with the incremental amount?
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let's say we take it down to 20 with allocations of 15 points. i would take 5 point directly into infrastructure which would create jobs and help the infrastructure of this country. number two, what i would do is take five points and pay the debt down. i think everybody would sign up for that. i go into one of the main companies and say here is a your budget. if we give you another 5 points of what we repatriated on your cash offshore, it has to be increment tall to what you are doing. if people say they are going to spend it. let's have accountability. >> one of the criticisms has been many ceos if they got that money back, they would it's for buybacks and dividend. you have been in that position. do you think most of the ceos when faced with that objective of having to allocate that money
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to build their businesses, do you think they will sign on that? >> i would. it's a quid pro quo. it's good for the country and good for the company. anthony: taking a trillion dollars back onshore, do you think we can grow again at 3 about 5, 4% on the gdp? >> absolutely. anthony: taxes, infrastructure, and a reduction in the burden some regulations. >> we have been there before and we can do it again. we have to face some of the changing issues. technology isn't creating jobs, it's displacing jobs. we thought there would be an exchange of he job created through technology, there would be an equal. but we aren't seeing that.
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anthony: what would you say to the workers who have anxiety about their displacement? >> we used to do this before. we did job training. we created aspirational opportunities for them. there is an area for services, there is an area for, you know, physical labor today. if we spent five point that repatriation on infrastructure, it would create tremendous job opportunity for people who have become diskowrnld an dis -- ared and under employed. anthony: we'll be back with more right after this. >> announcer: next it's trump versus clinton. which candidate will be better for busi i don't want to live with the uncertainties of hep c. or wonder whether i should seek treatment. i am ready.
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anthony: welcome back to "wall street week." we are talk with bob nardelli, one of the most successful ceos of all time. one thing investors hate is uncertainty. but all these workers are rallying behind donald trump. where do you think this is going? >> when you talk to some of the fortune 500 in the business council and the surveys, uncertainty is top of the list of concern. uncertainty in the currency and the economy and a whole host of things. i think the blue collar worker, the average worker's support of donald trump is well found and well placed. it would be great to get a business-oriented person in the white house versus what we have had the last 8 years. you think about this administration. it shut down $400 billion of potential merger and acquisition
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that would help grow companies, create productivity. bring product faster, sooner. anthony: why do you think they have collapsed on business in that way? >> i don't think there is a bias toward business. i don't think they understand the markets. i don't think they support capitalism, and they are on a different agenda. if you look at the two potential candidates. we lost the world champion boxer a few days ago. if you were to compare this to a boxing card. trump versus clinton. trump clinton. right? i think we are going to have a great next couple of months. gary: you think donald trump is the next president? >> i do. and i think it would be good for this country. we all have some detractors. anthony: are you going to vote for donald trump? >> yes.
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gary: you made anthony very happy. anthony points out about the uncertainty, the slow economy, uncertainty about the election. the s & p is flirting with the all-time high. we know that's all about the fed. the fed is going to meet next week. the markets have rallied in the los several weeks because of the anticipation now. the economy is so slow, the feds will sit on their hands again. is this a good thing that the fed continues to dictate the capital markets. >> i don't think yellen will raise the rates. she is very concerned about going up and having to come back. that's point number one. i think subconsciously a lot of people are frustrated with the lack of return because of the low interest rates, gary. and therefore substantially they are taking morris can by going into the equities markets. gary: they are being forced into the markets. >> you have seen people going
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into munis. not as high a return but some more security and certainty about it. it's better than keeping it in cash. but i think people are going to the equities market. gary: the amount of negative interest rates out there, the amount of paper around the world with negative interest rates. this worries me. this is very, very scary, the amount of money being put into negative interest rates where there will be no return. what is this going to look like five years from now? >> we see it around the globe, and it's very concerning. it creates a lot of anxiety. you put your money in there and you have to pay to put you're money into an account? it's unconscionable. anthony: the phone for it is slow growth. if you have the economy growing at% it would lift the tide of
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the rest of the market. what steps would you like to see, if day one the trump administration, what would be the 100 days you would like to see to get the economy growing again. let's talk about pre-reform in corporate tax. when i was running ge power system and i had to compete against siemen's, i my was at a disadvantage because of corporate tax. because of corporate tax. gary: we are the highest corporate tax rate in the world. >> trump's idea for corporate tax reform for businesses is positive. what we are doing on policy and regulation, we'll see a repatriation of jobs back in this country. we killed one of the greatest growth areas we had. and that is energy independence.
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by not allowing for export of oil and natural gas. anthony: they are saying climate change is the reason they have done that. >> i'm sensitive to climate change. but if you think about job creation and the average worker on a rig making $92,000 a year. not the 180,000 a starting lawyer is making. but we killed energy independence. we went from 4,000 rigs to 400 rigs, and we could have used it as a geopolitical advantage. we have have helped germany over there with their concern about russia. anthony: military strategy as well. >> it could have helped us on a geopolitical basis. >> i know you will speak to donald about having bob join that blue ribbon committee.
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i think it will be great. job, thank you for joining us today. we'll be right back with more. >> announcer: "wall street week" bringing you investing advice from one of the world most successful investors next. one of the world's top short
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gary: this week valeant pharmaceutical cut its outlook and it's not pretty. tone require many trading at $24 a share. last summer it was over $200 a share. jim chanos is a world class short seller. he sat down at the salt
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conference in las vegas and he told us yes decided to start shorting this stock. >> i never understood the model and i still don't understand the model of this whole specialty where you buy drugs, then hike the prices 8 fold or 10 fold. i keep coming back to why didn't the company that owned the drugs originally do that. the problem is the reimbursement system. th -- the payers have woken up. even today the stock has a total enterprise value of somewhere in the mid $40 billion area and a cash flow that's dropping. the idea i gave at the conference today, we just keep focusing on ideas where the business is deteriorating and the debt is monstrous.
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people are shying away from those stories. gary: last year we talked about the art of short sellingy where you have to focus on the fundamentals and stay away from the noise. tesla and solar city. >> both of which are short. gary: solar city had a disastrous situation and tesla continues to be a big story stock. but these are stocked the public has gotten involved with. how does one stay fundamentally short when there is so much snipe behind a stock. >> both of them we are still short. they are a little bintd different. but they were linked by h elon musk. the solar city story is problematic. they are burning a ton of cash and their financing sources are getting much more expensive or drying up.
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the problem of the rooftop so larp modesolarmodel is under qut that economical. they are losing money on every solar panel put up and make it up on volume. they have a ridiculous amount of money tied up in the business and it's earning a small return and it's levered. tesla is selling a dream of 2025 we are all going to be driving around in autonomous cars watching netflix and check our facebook and it will be in tess peninsula cars. but -- in tesla cars. the problem is to get to that vision and that means they have to be a car company. they have to produce a lot of cars. anthony: as a short seller they had that record product launch
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and 22,000 units sold. >> they took deposits. they used those doe possible its to pay off a loan. it's just another way to finance the business. he's burning a lot of cash at tesla. both these companies are burning hundreds of millions of dollars every quarter. gary: sothebys, you were with us a year ago, the stocks down 30%. what's going on there? >> we just had the spring sales for christies. the sales were down anywhere from 50% to 70%. the market is doing what we thought it would do. it's dropping. it's dropping because one by one we are losing the buyers. gary anthony: do you think it's because.
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gary: stopped buying art? gary: the problem was i never bought a piece of art. >> we lost the russian and south american buyers. anthony: what's the main noise in the system, the smoke you looked at as a short seller. gary: you mean the balance sheet? >> one thing i will tell your viewers, very wary of is a company that shows two things. lots of management stock sales to different people. but more importantly management departures. if you have seen a company where 10 or 15 or 20 people are leaving in the space of a year or two, two companies in the last 12 months fit that bill. valeant and tesla.
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anthony: it sounds like funeral music. gary: you identify and look at the specific companies and you are great at it. you built the portfolio by helping out. >> we are along the market. gary: one of the themes at this years event even by those that are perma bulls being always bullish. people are concerned about the overall market. do you have any thoughts where the market is right now? >> i do like anybody else, but they are not worth much. gary: are you surprised the pharma bulls are cautious? >> they seem to be fully invested. we were at a breakfast you hosted. one of the participants point out, the market is only 16 times earnings. that's $130 on the s & p. pharma earnings are $105.
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and the actual reported earnings are $85. everybody seems to use their own valuation metrics to justify where we are. the market is quite expensive. anthony: the spectre of recession. a lot of our guests are saying there is a chance of recession. >> earnings have been dropping and if we keep profit margins for the cycle it makes it tougher. gary: before we go, we have to ask you, the situation in china. any bert or is it worse? >> it's always worse and it's worth than even i think it is. the people's republic is made up. anthony: we'll leave it there. jim chanos. thank you. gary: that was our friend and
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legendary investor jim chanos. anthony: next week the current director of black rock. we'll see you then. innovative sonicare technology with up to 27% more brush movements versus oral b. get healthier gums in 2 weeks guaranteed. innovation and you. philips sonicare. save when you buy the most loved rechargeable toothbrush brand in america. i am proud of you, my man. making simple, smart cash back choices... with quicksilver from capital one. you're earning unlimited 1.5% cash back on every purchase, everywhere. like on that new laptop. quicksilver keeps things simple, gary. and smart, like you! and i like that. i guess i am pretty smart. don't let that go to your head, gary. what's in your wallet?
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night from new york. >> announcer: this show has never been solely about investments. we talked about anything that affected people and their money. from new york city the new "wall street week." anthony: welcome to "wall street week." i'm anthony scaramucci. gary: i'm gary kaminsky. it's been one week since wall


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